Laurier grad’s life changes in flash after his book on super-fast stock trading comes out

Brad-Katsuyama.jpg

WATERLOO REGION — Brad Katsuyama's life has changed dramatically since the book Flash Boys was published almost two weeks ago.

It put the Wilfrid Laurier University graduate at the centre of an international controversy over high-frequency trading on Wall Street.

Katsuyama had no idea what was coming last summer when writer Michael Lewis called, looking for some background. Lewis, a financial journalist and author of two previous blockbuster works of non-fiction — Money Ball and The Big Short — was doing research for a Vanity Fair article on Sergey Aleynikov.

Aleynikov was a $400,000-a-year computer programmer for Goldman Sachs. He was convicted of stealing computer code for high-frequency trading when he left the firm. The conviction was later overturned.

After Katsuyama started talking, Lewis was hooked.

The former Laurier student laid out how some Wall Street banks and investment houses used super-fast computers to learn about orders from other investors, and make billions a year on that information, all in tiny factions of a second. The system was gamed and victory went to those with the fastest computers.

Katsuyama was so outraged he quit his $1.5-million-a-year job with RBC to build a new exchange from scratch, one that blunts the advantage of crazy-fast computers. The IEX — the Investors Exchange — opened in New York City on Oct. 25, 2013.

Meanwhile, the background chats with Lewis blossomed into a book, which was released on March 31.

"As he got to know and talk to us more, he became slightly more interested in our story," Katsuyama said of Lewis. "Things just evolved from there."

The evening before the book was released, 60 Minutes aired a documentary about Katsuyama. Within 30 minutes after the television show ended, Katsuyama received more than 100 resumes from Wall Street traders who want to work with him.

"We feel very lucky to be in this position," Katsuyama said Friday in a phone interview with The Record. "Starting on the Sunday night before the book came out things started to change pretty rapidly."

The publicity associated with the book launch helped push up trading volume on the IEX by 40 per cent this past week, compared to last month.

Katsuyama's life now has two phases — pre-book and post-book.

"The engagement and interest from the public has been astonishing," Katsuyama said. "It's amazing to see, when people are educated and motivated, what they can do. The general public can have a huge impact on the outcome of what happens here."

Complete strangers have stopped him on the street.

"Ever since the book came out, it's been happening," Katsuyama said. "Most to say 'thank you' and 'keep doing what you are doing,' and 'thanks for standing up for us.' It's all been positive."

There are 13 regulated exchanges in the U.S. and the trading volume at IEX is now often bigger than four others. Traders keep applying to work at IEX.

"There are a lot of good people on Wall Street, they really just have to find each other and find ways to work together," Katsuyama said.

Katsuyama was not the first trader on Wall Street to delve into the impact of high-frequency trading, but he is the only one to raise an unholy ruckus about it. He attributes his strong moral compass to his upbringing in Markham.

"I had a very tight relationship with my parents and my brother. I had a really good group of friends, some of whom I went to Laurier with," Katsuyama said. "I never felt the need to do anything, but be myself. That served me well growing up and throughout my career."

Katsuyama graduated from Laurier in 2001 after studying business and economics. For two years, he played football for the Golden Hawks — as a tailback and kick returner.

"It was great, I was in the school of business and economics, I had some good friends from high school who went there as well," Katsuyama said. "I enjoyed it. It was a good school."

Brian Smith, a business professor at Laurier, remembers Katsuyama and stayed in touch with his former student, whom he called very bright.

"He was a very engaging student back then. I have a very clear memory of him," Smith said. "He was very-well rounded, very likable, very sincere student," Smith said. "The sincerity that you see, the earnestness, that's real, that's not a fake thing."

(1) Comment

By My|APRIL 12, 2014 10:06 PM

Ah the good ole boys at Goldman Sachs, they innovate in making the rich richer at all costs to the global economy. They privatize their quick and easy gains (pay as little tax as possible on it while whining about what they do pay), and when they play too fast and loose with the nation and world's economies, they socialize the losses putting the burden on the average tax payer in the form of bailouts, destabilization, and loss of vital credit for businesses.